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HMRC internal manual

Tax Credits Technical Manual

Calculation of entitlement: the rates and how to use them

Appendix 1 - The rates and how to use them

Note: At points in the calculation when the legislation does not require the numbers to be rounded the calculations display numbers only to 3 decimal places (dp). This is for presentational ease and does not affect the remainder of the calculation. As a result there may be occasion when your own calculation may vary slightly to the award, however this will be rare and due only to the rounding applied by the computer system. For most cases, the 3 figure (dp) number will be used in the rounding but occasionally the last figure displayed will show a zero, for example 1.120. An assumption is therefore made that there are further numbers after the 0, (for example, 1.1201) which when rounding up will result in 1.13. In these cases only, the rounding is shown as 1.120 = 1.13.

Working Tax Credit

The Working Tax Credits (Entitlement and Maximum Rate) Regulations 2002, Schedule 2

WTC includes two entitlements:

  • Work elements
  • Child care elements
WTC Work Elements 2018/2019 rates 2019/2020 rates Calculation TY 2019/2020 (366 days) Maximum daily rate
Basic element £1,960 £1,960 £1,960 / 366 = £5.355 rounded up = £5.36
Second adult element £2,010 £2,010 £2,010 / 366 = £5.491 rounded up = £5.50
Lone parent element £2,010 £2,010 £2,010 / 366 = £5.491 rounded up = £5.50
Disability element £3,000 £3,165 £3,165/ 366 = £8.647 rounded up = £8.65
Severe disability element £1,290 £1,365 £1,365 / 366 = £3.729 rounded up = £3.73
30 hour element £810 £810 £810 / 366 = £2.213 rounded up = £2.22
50 plus element (16-29 hours) Withdrawn Withdrawn - -
50 plus (30+ hours) Withdrawn Withdrawn - -

Note: The 50+ element ceased 6 April 2012

WTC Childcare Element

The Working Tax Credits (Entitlement and Maximum Rate) Regulations 2002, Regs 20(2) and (3)

The WTC childcare element is worth up to 70% of allowable childcare costs (up to a limit). Maximum eligible costs are £175 per week where there is 1 child in relevant childcare and £300 where 2 or more children are in relevant childcare.

Max childcare costs 2018/2019 rates 2019/2020 rates Calculation TY 2019/2020 (366 days) Maximum daily rate
1 child £175.00 £175.00 £175.00 / 7 = £25.00 round up = £25.00
2 or more children £300.00 £300.00 £300.00 / 7 = £42.857 round up = £42.86

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Child Tax Credit

CTC includes two entitlements:

  • “Individual Elements” and
  • “Family Element”

The CTC Individual Elements includes the following elements:

Elements 2018/2019 rates 2019/2020 rates Calculation TY 2019/2020(366 days) Daily rate
Child Element £2,780 £2,780 £2,780 / 366 = £7.595 rounded up = £7.60
Young person element £2,780 £2,780 £2,780 / 366 = £7.595 rounded up = £7.60
Disability element (includes child element) £3,275 £3,355 £3,355 / 366 = £9.166 rounded up = £9.17
Severe disability element (includes child element) £4,600 £4,715 £4,715/ 366 = £12.882 rounded up = £12.89

The CTC Family Elements includes the following elements:

Elements 2018/2019 rates 2019/2020 rates Calculation TY 2019/2020 (366 days) Daily rate
Family element £545 £545 £545 / 366 = £1.489 rounded up = £1.49

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Income Thresholds TY 2019/2020

Thresholds 2018/2019 rates 2019/2020 rates Calculation TY 2019/2020 Daily rate
WTC threshold £6,420 £6,420 £6,420 / 366 = £17.540 £17.55
WTC withdrawal rate 41% 41% - -
CTC only threshold £16,105 £16,105 £16,105 / 366 = £44.002 £44.01
CTC 2nd threshold Withdrawn Withdrawn - -
CTC withdrawal rate 41% 41% - -
Income rise disregard £2,500 £2,500 - -
Income fall disregard £2,500 £2,500 - -